Car Talk

[sadchild]

What I don't like is I suspect it works like this.
1. Something happens in the middle east
2. Oil execs know immediately that people associate middle east with oil so they charge more "expecting the price of oil to increase"
3. If the price of oil doesn't go up, they say "Well, it could have" and stuff their pockets.
4. If it goes up, they say "SEE! We had to increase prices". But then when prices come back down, if the middle east is still in the news they keep the prices high.

The proof is in the fact they post record high profits. Not just for their company, not just for their industry, but record highs for the history of mankind.

Oil companies reap unprecedented profits as Americans struggle to pay for food and gas

Soaring energy prices baked into delivery costs are driving up the cost of everything from apples to toilet paper.

www.cbsnews.com

 

[scotchandcigar]

What I don't like is I suspect it works like this.
1. Something happens in the middle east
2. Oil execs know immediately that people associate middle east with oil so they charge more "expecting the price of oil to increase"
3. If the price of oil doesn't go up, they say "Well, it could have" and stuff their pockets.
4. If it goes up, they say "SEE! We had to increase prices". But then when prices come back down, if the middle east is still in the news they keep the prices high.

The proof is in the fact they post record high profits. Not just for their company, not just for their industry, but record highs for the history of mankind.

Oil companies reap unprecedented profits as Americans struggle to pay for food and gas

Soaring energy prices baked into delivery costs are driving up the cost of everything from apples to toilet paper.

www.cbsnews.com

Once again - as we've had this discussion - the price of everything is up significantly; there's no logic in singling-out oil. The price of things today, and the worldwide inflation, is due to effects from the pandemic. Around the world, the pandemic has caused worker shortages, supply-chain delays etc. that have significantly reduced the ability to produce and ship large quantities of nearly anything. This is reason #1.

Reason #2 is that part of the world (such as the US and Canada) has gone from working-from-home to returning to work, from "staycationing" to traveling again. So the demand has shot up, and that increase in demand happens to align precisely with the increase in gas prices. But reason #1 says that we can't meet that demand.

Reason #3 is how the pandemic affected the job market. In an odd twist, when the pandemic hit, we entered a recession, but the stock market was still artificially pumped-up due to things I can't discuss here. That resulted in a record number of people in their 50's and 60's deciding to retire early. And the ripple effect is that today, unemployment is down to 3%, but there are still millions of unfilled job positions in this country. People have quit their low-paying jobs in droves, and have moved up to higher paying ones. This is a big factor in today's inflation, and it's part of a cyclical problem that significantly raises the cost to do business.

The cost of buying chicken at the supermarket is up like 50%, but the price of farm chickens isn't up that much. But the labor and supply-chain issues with getting the chicken processed and to the store is what is driving the increase. Same with oil. For a given price of a barrel, the costs to get it to a refinery, and to refine it, and then get it to a distributor, and distribute it is driving the price up.

And of course, reason #4 is the war in Ukraine. That's 4 reasons it's not oil company greed, or Joe Biden, or Nancy Pelosi, or illegal immigrants, or pipelines, or any of the other bullshit people claim. Now, are oil companies taking advantage of the situation? Sure. But that is happening everywhere.

 

[HecticArt]

Once again - as we've had this discussion - the price of everything is up significantly; let’s single-out oil because we can. Oil companies are greedy. This is reason #1.

FIFY

 

[sadchild]

Once again - as we've had this discussion - the price of everything is up significantly;

I agree with everything you say, and you're right, simply saying 'oil company greed' is short-sighted. And I have a bigger view of the issue now. But at the same time, making record profits in the history of Earth is still greed. If I live on an island with 100 people and am the only source of everyone's food, and every time some jackass starts a rumor that there "might" be a food shortage because someone on another island said a storm knocked down all their banana trees, and I then double the price of food and people starve, and then I walk away with everyone's last penny after jacking up the price saying "Well, there WAS a storm 300 miles west of here that could've hit us too", then I'm an evil prick (aka a businessman - George Carlin's definition). Of course I'm exaggerating to a ridiculous extreme, but only to make the point that business shouldn't be "how can squeeze every extra penny out of these people who I don't care if they die from it" but - hey, welcome to humans.

 

[scotchandcigar]

I agree with everything you say, and you're right, simply saying 'oil company greed' is short-sighted. And I have a bigger view of the issue now. But at the same time, making record profits in the history of Earth is still greed. If I live on an island with 100 people and am the only source of everyone's food, and every time some jackass starts a rumor that there "might" be a food shortage because someone on another island said a storm knocked down all their banana trees, and I then double the price of food and people starve, and then I walk away with everyone's last penny after jacking up the price saying "Well, there WAS a storm 300 miles west of here that could've hit us too", then I'm an evil prick (aka a businessman - George Carlin's definition). Of course I'm exaggerating to a ridiculous extreme, but only to make the point that business shouldn't be "how can squeeze every extra penny out of these people who I don't care if they die from it" but - hey, welcome to humans.

Yes, that is often how some unscrupulous businesses work. But in this case, the price set for a barrel is primarily what the oil companies profit from. So if they make, let's say, a 25% profit margin based on the price of a barrel, that's $25 for a $100 barrel. If a barrel is at $50, they make $12.50 per barrel. But the percentage is the same. This is how the world works; real estate, construction, oil, everything. Now the question is why the barrel is at $100. That's due to world factors, which are not set by the oil companies, but by OPEC. And again, the costs of shipping and refining and delivery is way up now, so the price of gas will be higher than what you might expect for a $100 barrel of oil.

 

[scotchandcigar]

And I need to reiterate once more, that in the US, the price of a gallon of gas has been kept artificially low for decades. Gas sometimes gets down to $2.00/gal, which is the same price as 25 years ago. The current price of over $4.00/gal was seen a dozen years ago. Try finding a house that's going for the same as 12 or 25 years ago. The rest of the world pays $10 for a gallon or more.

 

[sadchild]

Now the question is why the barrel is at $100.

My question is - if the price set for a barrel is primarily what the oil companies profit from - why when the cost of oil drops significantly, the cost of gas doesn't?

 

[HecticArt]

My question is - if the price set for a barrel is primarily what the oil companies profit from - why when the cost of oil drops significantly, the cost of gas doesn't?

Soooooo……..greed.

yep.

 

[scotchandcigar]

My question is - if the price set for a barrel is primarily what the oil companies profit from - why when the cost of oil drops significantly, the cost of gas doesn't?

But that's just now (like right now, in the pandemic). All the labor and supply-chain and inflation issues that are affecting everything are affecting this. Reread my comments about the price of chicken.

 

[scotchandcigar]

Also, that chart doesn't make sense. There's a big delay between getting oil out of the ground at some price, and putting gas into your car.

 

[JHDK]

BMW's are much more expensive to service than a normal like Toyota or Hondas right scotch?

Not sure if I'm right abt that...and u prolly still have a warrantee, but my mechanic who I've swared by in this thread multiple times, told me he doesn't do fancy cars, besides like basic tires or oil change stuff.

 

[sadchild]

There's a big delay between getting oil out of the ground at some price, and putting gas into your car.

Amazing how there's no delay on gas prices going up with the price of oil (left side of chart), only a delay when going down (right side)

 

[scotchandcigar]

Amazing how there's no delay on gas prices going up with the price of oil (left side of chart), only a delay when going down (right side)

Exactly. I don't understand the left side. When they raise the price of a barrel of oil, it probably takes a month or 2 for that oil to be shipped to a refinery, refined, then shipped to a distribution point, and distributed.

In fact, I just pulled up this excellent chart. You can even select a section and have it zoom in. And as I would expect, there's a lag between the two of a month or 2.

Crude Oil vs Gasoline Prices

This interactive chart compares the monthly price performance of West Texas Intermediate (WTI) Crude Oil vs national average gasoline prices back to 1986.

www.macrotrends.net

 

[scotchandcigar]

BMW's are much more expensive to service than a normal like Toyota or Hondas right scotch?

Not sure if I'm right abt that...and u prolly still have a warrantee, but my mechanic who I've swared by in this thread multiple times, told me he doesn't do fancy cars, besides like basic tires or oil change stuff.

That's funny, because most local repair shops claim that "a car is a car", and they can repair or service anything, as they're basically all the same. They say that so they can get more business. However, over the many years I've had BMWs (close to 30 years now), there have been some times where it helped to be familiar with the particular workings of these cars. And most of the replacement parts are specific to the car, so they're not just sitting on a shelf in the parts bin.

If your main priority is cheap operation, get a Camry. They don't require much servicing, and parts are plentiful and reasonable. However, my last several BMWs (going back to 2004) have been extremely reliable, and inexpensive to maintain.

First of all, yes, they had some warranty coverage. One was a CPO, and had a 2-year extended warranty. I had it for 3 years and only did oil changes and maybe brakes. I think the convertible top needed some sealer replaced, but that was covered.

The next 2 ones I ordered new, and each one came with a 4 year, 50k bumper-to-bumper warranty - which is unheard of in the industry today. Many other brands, such as Audi, Lexus, and Volvo had them and dropped them. And in conjunction with the great warranty, they rarely had a problem. I had one back in 2001 that had endless problems, so I've dealt with that too. And with the 2 new ones I mentioned, I leased to buy. When I did that, they gave me 2 years of extended warranty as a CPO.

The cars really require minimal maintenance. Oil changes are only every 15k miles, and cost about $100. There's some minimal routine servicing every 30k miles. And maybe you'll need front or rear brakes every 50k. The engine doesn't require tune-ups; the drivetrain doesn't require lubrication; and the stainless exhaust is good for over 10 years. The engine cams are chain-driven, so there's no costly belt replacement like on every Honda. The only thing that needs to be done is have the water pump preventatively replaced at 75K miles or so. My last BMW had a clutch that was still working fine at 150k miles. I believe I had the front struts replaced at 100K, but that wasn't too costly. I never had any signs of corrosion or rust.

My experience with Mercedes is quite different. They seem to be the classic over-engineered, expensive to fix and maintain car. I had one, and my dad had one that my mom ended up fixing.

 

[HecticArt]

Exactly. I don't understand the left side. When they raise the price of a barrel of oil, it probably takes a month or 2 for that oil to be shipped to a refinery, refined, then shipped to a distribution point, and distributed.

In fact, I just pulled up this excellent chart. You can even select a section and have it zoom in. And as I would expect, there's a lag between the two of a month or 2.

Crude Oil vs Gasoline Prices

This interactive chart compares the monthly price performance of West Texas Intermediate (WTI) Crude Oil vs national average gasoline prices back to 1986.

www.macrotrends.net

Sooooooo..... Greed....... Got it.

 

[HecticArt]

My tires are getting close to needing to be replaced. I think they are about 8 years old and the treads are getting thinner. I’ll probably change them in the spring.

Holy Sh!t, Batman. Most tires need to be replaced every five years. Especially since the rubber becomes weaker and degrades faster five years after being manufactured.

BTW, anyone know what a tyre is?

I finally got my tires replaced this weekend.
They were closer to 9 years old.

 

[Channel98]

"The wheels on the SUV go round and round, round and round.......hey, where'd they go?!?" Here is an update to the story I posted on June 24:

Toyota is offering to buy back an electric SUV because its wheels could fall off | CNN Business

In June, Toyota issued a warning to owners of its BZ4X electric SUV that they should stop driving the vehicle and have it transported to a dealership because of a severe problem: the wheels could fall off while driving even after just a short time on the road.

www.cnn.com

 

[JHDK]

It's down to 3.73 a gallon here at my cheap station (wawa). How abt u all?

Still not great, but a whole lot better than 5+.

 

[HecticArt]

About $3.90 here. Still sucks, but at least it's improving.

 

[IdRatherBeSkiing]

I filled up my dads car in Saskatchewan for $1.45/l on Sunday.